Business Strategy. The Alignment of IT and business

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Table of Contents

Discussion – IT and Business Alignment
The Need for Alignment
The Challenges of Alignment
Analysis
Conclusion
References

Today’s business environment is such that there is an immense need for agility for all kinds of businesses, be they in the services sector or manufacturing. Businesses need competitive advantages, they need to streamline their process in the best manner possible, they require real-time information for critical decision making and they continually search for new opportunities (Align Journal, 2009). For all these requirements, the alignment of IT and business is crucial. Therefore, I do agree that an IT strategy focused on maintaining a cutting-edge technology position is the most effective way to support any kind of overall business strategy.

Discussion – IT and Business Alignment

Agility and innovation are key requirements to maintain a leadership position in today’s dynamic and fast-paced business environment. Agility is the ability of organizations to quickly adapt to change and to respond to changing customer requirements. These organizations are robust and strive for continual competitive advantage. These organizations are also innovative and make innovation a big part of their overall strategy.

The business people must know how to leverage technology to gain this edge in business. Aligning technology and business is all about this; knowing how to make technology a part of your overall strategy. Successful and agile organizations such as Procter & Gamble are perfect examples of companies who have appropriately aligned their IT and business (Align Journal, 2009).

The alignment of IT and business should be well understood by the respective organization’s CIOs, IT managers, business managers and business executives. This is that group of people who work together to align both, the technology and business. These individuals and/or groups must have a thorough understanding of alignment, the need for it, and its drawbacks.

The Need for Alignment

According to a survey of CIOs during the past decade, the role of IT is mostly one of their top five concerns (Berkman, 2001). This means that most CIOs, or in other words, most companies, think of IT as an important part of their overall business strategy. This in turn means that they are given more responsibility, greater budgets, and even a chance for greater interaction with all the other departments. How? IT such as ERP aims to integrate all departments of an organization. Therefore, this makes the IT department central.

The question is why? Why a change in perception about the business strategy? IT was never a part of the business strategy; it was always things like expansion with the help of new plants, etc. However today, this perception has taken a complete turn; most of the business strategies today interweave IT as a part of it. IT is becoming so important and crucial with the advancement in Internet. The internet has made consumers aware of the choices and the power that they have. They have made competitors aware of the advantages that your company has. In other words, the internet has made everything very transparent, dynamic, and fast-paced.

To keep up with this pace, to make use of the data that companies have, to generate timely information, to streamline business processes, to gain competitive advantage, a company must be aware of the opportunities that IT brings for it.

These opportunities are directly related to the success of an organization? How? For example, streamlining processes effectively with the help of the information technology such as CRM or ERP will make your organization a profitable one by providing customers exactly what they want (by understanding them completely). Therefore, such technologies form a core part of the business strategy because they are directly related to a business’s major goal of maximization of profits.

The Challenges of Alignment

The challenges and the difficulties involved in alignment are many. Most of them have to do with the inconsistencies between technology and business aims. One reason why it is alignment is so difficult is that whenever technology is proposed, the advantages of the technology itself are emphasized rather than the advantages that this technology will bring for the organization. This raises doubts about alignment (Jahnke, 2004).

Secondly, business goals are dynamic. Things like mergers, change in management, new rivals and many others take place so quickly and smoothly that it’s hard to predict what the future of a company is going to be exactly. For this reason, alignment may not always bring the benefits that it is required and expected to (NCC, 2009).

Another reason is that business people themselves do not understand technology. Once a software solution is implemented, they expect revenues to be generated instantly. However, it takes much more than just implementation. The processes must be understood and mapped to the new technology, and most importantly the employees, or the end-users, must be motivated, managed and trained to use the software well.

Also, companies and most executives are guided by IT organizations during the course of alignment. These IT organizations sometimes fail to understand the organization and its needs and as a result, deliver the wrong kind of solution or the right kind of solution but the wrong translation of needs (Jahnke, 2004).

According to Jahnke (2004), technology people and business people cannot look at alignment in the same way. They believe what they expect to see. The technology side expects fewer problems, impressive infrastructure, easy debugging, and better modularity in the code. While business managers expect to see increase in sales, higher customer retention, greater efficiency and ultimately higher profits.

Another problem of alignment is in the request process. The management fails to tell the IT organization what it really needs because it is unaware of what IT can deliver. IT experts on the other hand, as mentioned earlier, do not understand the business well in the sense that they cannot see where each unit is headed to. This leads to communication problems and ultimately the wrong kind of IT solution is made part of the overall business strategy (NCC, 2009).

Analysis

In the previous sections, the need for alignment and its challenges have been made quite clear. It is easy to see that the challenges mentioned are many more than the needs. However, I still agree that an IT solution should be interwoven into the overall business strategy for greater success.

Notice how the word ‘greater’ is used before success. A well-planned, well-executed non-IT business strategy may also be successful for an organization. However, a well-planned and a well-executed IT solution, in my opinion, is going to be far more successful for any organization. All the challenges involved in alignment are avoidable except maybe changing business goals. A business has to be dynamic and flexible by nature to keep up in the intense corporate environment. Rigidity in goals will only backfire.

All other challenges have solutions and that also, very achievable ones. First of all, before alignment, all persons and groups responsible for it must do their homework. The CIO, the COO, the CFO, business managers, business executives, IT organizations must all know what alignment is all about. It is not just business or IT, it is both. All these individuals must read up on alignment and gain insight into the subject.

Secondly, the business must fully develop its functional and non-functional requirements for the IT organization. It must also appoint a person or a group of people who understand both the business and the IT. The CIO is the ideal person for this and must be sure that he understands both. It must then be able to deliver its needs according to the IT solution. The IT organization must be able to translate the needs of the business.

Finally, during and after an IT solution is implemented, employees must be continually motivated and trained because it is ultimately them who will be using the system to drive the overall business strategy and aims of the business.

Conclusion

It is appropriate to be concerned about alignment because of the many issues that it involves. However, “lack of alignment is a waste” (Jahnke, 2004). It is an opportunity for a company and for its shareholders. Alignment also brings money (CIO, 2007). Therefore, the ROI of alignment is substantial, if implemented in the right way.

References

(2009). About the US. Align Journal, Web.

Berkman, E. (2001). Why We’re Still Talking About Alignment. Web.

CIO. (2007). The ROI of Alignment. Web.

Jahnke, A. (2004). Sounf Off- Why is Business-IT Alignment So Difficult. Web.

National Computing Center (NCC). (2009). Aligning IT With Shifting Business Goals. Web.

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